Is the Real Estate Bust Over?

It seems to me that the reports and even the media are saying that residential real estate has most likely already bottomed out. The recovery has begun. One report states the majority of homeowners surveyed (across the U.S.) are believing that the values of their homes won’t be dropping and may even go up! Things are settling down. I am guilty of the same reporting. I said the same thing back in January! So, is it over? It will take about 6 more months to make certain we are past it however the signs are good that the residential real estate market has stabilized.

Where do we go from here? In my thoughts residential real estate will stay relatively flat here in Idaho with perhaps a 1-2% gain over the next couple of years. It is important to remember that real estate in Idaho generally appreciates at 4% per year on average. More importantly we need people to get back to work. We need jobs here in Meridian that pay more than $10.00 dollars an hour. If the majority of jobs are $10.00 dollars per hour and are part time with no health benefits, it will become difficult for first time home buyers to buy a home. Unless the cost of the home stays low. If you recall one of the things that helped caused the real estate bust was first time buyers were priced out of the market. If you can’t sell a starter home to an owner occupant, the move up homes become unreachable. The market stalls and well you know the rest.

The City of Meridian has begun working on The Health Sciences & Technology Corridor, The Core (www.thecoreidaho.com). [Please see map] They also have the Meridian Development Corporation (MDC) For more information about the MDC, please visit its web site  www.meridiandevelopmentcorp.com or contact MDC Administrator Shaun Wardle at 863-4160.

Let’s keep moving forward and pull ourselves up and out of this mess we are in. We have done it before as a Nation and there is no reason we can’t do it now. There is no quick fix. Just good planning and hard work.

Staycation

Hello my faithful readers and newcomers. I have just finished my staycation (a vacation where you stay at home). I loved it! One seems to forget just how bad we need an occasional break that isn’t tied in with something else to do. Lots of families take vacations that coincide with business trips, training camps for the kids, family reunions etc. While these are very fun they may not always be very relaxing as you are not on your own schedule.

My schedule was very difficult. I would get up late, usually by 7:00, make coffee and read. I actually read a complete book that had nothing to do with Real Estate or Sales etc. It was John Grogan’s “Longest Trip Home”. An excellent story of growing up in middle class America. When my family would wake up we would have breakfast together and then while it was still cool outside we would putter around the house doing various projects. Awesome! Gardening, starting a patio it was great!

We also supported the local economy by dining out a couple of times. We took in a movie, went to a baseball game and a soccer game or two, hiked on the Greenbelt, waded in the river, flew kites, went to the Meridian Symphony and basically just spent time together as a family with no true schedule or agenda. Very relaxing and enjoyable.

I had an excellent person watching over my real estate business while I was gone and we actually got some business done.

If you haven’t had a staycation in awhile. Thinks about trying one. Meridian is a great place to live and vacation. Now, as my wife says,  it’s time for me to get BACK TO WORK.

What’s Selling Meridian?

Homes are selling.  Across the nation existing-home sales-including single-family, townhomes, condominiums and co-ops-increased 3.6% to a seasonally adjusted annual rate of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are 0.2% lower than the 4.90 million-unit level in June 2008. According to the National Association of Realtors®.

In the Treasure Valley our Multiple Listing Service (MLS) has 10,924 active residential listings of which we sell approximately 780 a month which equals  around a 14 month supply. Canyon county has 2,367 active residential listings of which we sell approximately 178 per month which equals about a  13 month supply. Ada county has 4,835 of which approximately 424 per month sell which equals about a 11.5 month supply. REO and in foreclosure properties make up about a 10% market share of active listings and if we add in short sales not in foreclosure it is about a 25% market share of active listings. Inventory is drying up. That is good news. Have foreclosures stopped? No, however; they are selling.

 

By June 30^th of last year we had reportedly sold 5586 homes in the Treasure Valley MLS. By June of this year we have sold  4840 homes. A decrease of 746 sold homes. In Meridian last year from January to June we sold 760 homes. This year same time frame we sold 742 homes. A decrease of 18 homes. Now that is not all bad news. Say what Rich??? We sold less homes so far and that is still ok? Yes, remember we used to count inventory in years when this all started. We currently have in Meridian 1146 active residential listings, homes available for sale.  We are selling about 124 homes per month and if we do the math we have about a 9 month supply. We used to count inventory by the number of years.  A six month supply is the goal. When inventory dries up, prices first stabilize and then may actually rise. Does this mean you can sell your home for whatever you want? No, I’m afraid not and the value is not going to increase overnight. It means perhaps we have turned a corner. It means builders may begin to build again. The recession started in real estate and for the recession to end real estate needs to be selling again. It is.

Credit Damage/Repair

Often times consumers want to know how badly their credit will be affected by either a short sale or a foreclosure. I am here to tell you it may not be that bad. Say What!! It’s true, the negative marks to your credit may not be as bad as you may think. Tell you more? OK

According to the National Foundation for Credit Counseling www.nfcc.org  the credit reporting companies have not yet officially come out with how negatively a short sale will affect your credit. A foreclosure will definitely affect your credit negatively for 7 years. And that’s not bad Rich? Well according to the FHA (Federal Housing Administration) who makes about a third of all loans currently; you can qualify for a home in 2 years after a bankruptcy and 3 years after a foreclosure. That’s not too bad. That will give you time to clean up your credit and get back on your feet again.

 How do you clean up your credit? Great question. First I would recommend that you go to www.annualcreditreport.com I would get a copy of my credit report to see what it says. Then I would go www.myfico.com to learn about how your credit score is determined (click on the education center). Here they will also teach you how to repair errors on your report. If you choose to pay someone to fix your credit report I would start with the Idaho Department of Finance call them at 208-332-8000. There were many people claiming to “fix/repair” your credit who just take your money and run. The Idaho Department of finance closed many of them down and requires them to be licensed in the State to perform credit repair. Currently there are only 7 licensed to do business in Idaho. Look before you leap and know your rights. There are people out there who take advantage of those who could use some help. However it is your job to be well informed.

As we get through this tough economic time I have seen many a good person go through foreclosure and bankruptcy. I hope and pray that we all come through it with dignity for ourselves and empathy for each other. Hard times are not a license to abandon decency and compassion. Rather they should strengthen us and help us get a grip on what is important. Health, family, friends. If you have these you are truly wealthy, without them you have not.

HOMES ARE SELLING!!! PART II

Rich, I am way confused. Last week you were excited about homes that were selling and you were very positive. You ended by saying that the number of sales was less than last year. What  has you so excited? The rest of the story dear reader is the amount of activity that is going on. Since January of this year I have put together 10 deals buyers and or sellers. WOW! This is something I am hearing all over the Treasure Valley. Realtors are writing and receiving offers. Several properties have had multiple offers being submitted on them. Dear Reader let me tell you, THAT IS EXCITING!! First time homebuyers are buying, investors are buying. THAT IS EXCITING!!, things are heating up! Once the first time buyers and the investors start buying that means people can begin moving up to a bigger home. The wheels are starting to move! THAT IS EXCITING!! New construction homes are selling. THAT IS EXCITING!! Hey Rich, if that is true why are the number of sales down? Great question. Speaking personally less than half the deals I had going on closed. UGH! Some fell due to the buyers not being able to obtain financing (the credit they once had gotten was no longer available), some fell because the lien holders (sometimes the first, sometimes a junior lien holder) did not want to take such a low offer and/or the buyers did not want to pay more. This is also something I am hearing throughout the Treasure Valley. It is a very different market and will continue to be so. However it is very exciting. Next week find out how to receive your own bail out from the Government.

HOMES ARE SELLING!!!

Many people approach me and ask this question or some variation of it. Hey Rich, Can I sell my home? The answer is always yes. The real question they are asking is how much can I sell my home for and will it truly sell or must I buy it myself? The answer is yes it will sell. Oh, you need proof you say. Well as of Friday morning 4/24/09 according to the MLS search a total of 364 homes had sold so far in just Meridian alone. Of those that sold 103 were indicated as bank owned or REO and another 43 were short sales. Which means that 60% of the homes in Meridian that sold were not bank owned, reo, foreclosure, short sale type properties. Well if they weren’t bank owned, reo, foreclosure, short sale type properties than what were they Rich? They were homes owned by people like us. 81 of these were brand new homes that had never been occupied, 17 were under construction or to be built. People I have to tell you, HOMES ARE SELLING!!!

Now as Paul Harvey would say, the rest of the story. In the same time frame last year we sold 44 more homes. Darn the luck. That means about an 11% decrease since the previous year. But Rich, you sounded so positive. HOMES ARE SELLING!!!  you said. They are selling dear reader, however; things have changed. What you ask? More on that next week.

If You Are Going To Buy, Don’t Rent

Sounds simple enough doesn’t it. If you are going to buy, don’t rent. But Rich, you ask, where am I going to live? I have to live somewhere you say. I agree. You do need to live somewhere, however; do you necessarily need to be locked in to a lease for a year? Perhaps; that decision is up to you. What I am saying is that you need to plan your move so that when your lease is up you can leave and you have time to move into your new home without crashing at a friend’s place for a couple of weeks. Trying to buy a home, especially your first home, can leave many without the resources to afford to pay a mortgage and a rent. Some rental managers refuse to let tenants out of their leases. I actually heard of one that said the tenant was responsible for finding a new tenant. Hmmm, if you own a property do you truly want the tenant that is trying to get out of a lease to find the new tenant and show your property? The liabilities just make me shudder. Let’s get back to buying a home. So get with your Realtor and plan the move. The most frustrating of times is when you think that everyone will accommodate your schedule and then horror of horrors they can’t. They actually have their own schedule and they are going by what is written in the contract. Very frustrating to everyone involved. To avoid this you need to plan. Find out what the terms of your lease are and what can be done if you would like to get out of your lease early. Ask if you can go month to month if you are house hunting and need some extra time to close on a home. Most landlords are willing to help a good tenant out but keep in mind they need to protect themselves and keep the property rented. Try finding a solution that works for both of you. As a landlord I tried my hardest to not have a vacancy during Thanksgiving through January. Not so many people looking to move into rentals then however plenty of home buyers wanted to be in their home before the holidays. Other than that I was fairly open and accommodating if the tenant was working with me. So let everyone know what the plan is and then incorporate it into the contract. A good plan makes it easier on everyone and helps prepare for what is coming. Happy House Hunting, Rich

More Reasons To Buy a Home

 

If all the other reasons have not caused you to buy home, such as incredibly low prices and just as incredibly low interest rates, (who knows when that will change? I have actually heard of lenders raising rates because they have too much business??) To an excellent selection of homes to choose from then perhaps these reasons will help you decide.

 

I attended an economic meeting put on by a local building association. Their economist was actually quite fun to listen to as economists go. He did provide one segment of interesting information that I would like to share with you about the benefits of home ownership. He stated that the following things occur with home ownership:

1- There are less pregnancies (I believe/hope he was referring to our kids) when you own your home.

2- There is a decreased rate of incarceration when you own a home.

3- The school drop out rate decreases when you own a home.

4- There is an increase in the care and pride of a neighborhood when you own a home.

5- For our elected officials the amount of people who vote goes up with home ownership.

It makes sense to me dear reader. When you have a vested interest in something, time and/or money, you want to keep whatever it is you have and keep it in good shape. So go buy a home, meet your neighbors, set up a neighborhood committee, and work with your elected officials to make your neighborhood a better place to live.

I’m Twitterless and That’s OK!

I hear it around the office and on the news. Who is twittering who and what they are twittering about? The things people say and do. And now the twitter has gone from a social networking thing into a new way to do business. Need a job? Twitter. Employee needed? Twitter. I haven’t heard of selling a home yet however I can believe it has happened so please, no need to send the information. Is it new and unique? Nope! I believe similar things must have occurred previously when the telegraph was invented and the phone and so on. Different from anything else we have seen before? Not really.  It is just a different delivery system. The concept works because it is based on a social networking that exists prior to the deal being struck. Say What Rich?! I said it works because you know the person, and you rely on the trust built in that relationship. Which brings me to the point of this article? Many deals happen or don’t happen because of who you know, who knows you and who they know. I would venture to say that many more deals occur because of a relationship that exists prior to the deal being struck. This is why MLM systems work so well initially, you rely on your family and friends to help start the business. So Rich, if this is true why don’t you twitter? Because dear reader I prefer the old fashioned way of meeting people and getting to know them. Face to face. It has nothing to do with whether or not I am technologically savvy or not, (Yes I can turn on my own computer). It has to do with everything else that goes into establishing a relationship. Body language, expressions, tone of voice. These are not things you can learn from an IM, text, chat, email or twitter. When it comes right down to it, ya gotta meet face to face. So I invite everyone to set aside the cell phones, Blackberry’s, palms, Treo’s etc etc and let’s get back to basics. Let’s see who the people are we are doing business with. Let’s find local businesses that hire local people, who spend money where they live. Stop in and say hi to them. Get to know your neighbors where you live instead of the cyber neighborhoods you surf. I still visit with my neighbors over the fence. They know me and I know them. Instead of playing online I take my kids to the parks. I still go into the bank instead of using the ATM. I will never forget how a banker friend of mine introduced me to a loan officer. He said “This is Rich, I don’t know what he wants to do but whatever it is you will like it” WOW! After looking at my deal the lender said “Rich I don’t know if this business you want to buy will work or not but after what Floyd said I’ll give ya the loan” A computer can’t do that. But what do I know, I’m twitterless.

 

Bank Owned Properties For Sale, Some Not So Cheap

Everybody would like a deal. Homebuyers included. There is nothing wrong with that. The question is just what is a good deal these days. As of March in Ada County on our MLS there are approximately 251 bank owned properties for sale. Boise leads the list with 96, Meridian with 84, Eagle 34, Kuna 22 and Star with 15.** That seems like quite a few to choose from. And Yes I have gone and looked at some of these. I have looked both online and in person. Some offer a real opportunity for a home owner and some just miss the mark. How come you ask o wise reader? The answer is because real estate is truly a subjective thing. Lending institutions assign value to a property many different ways based upon their rules that they have established. This can sometimes lead to a good buy for a person. It may not be such a great deal for others. Sometimes the lender will assign a value based on information that has not been updated. Sometimes the lender picks a number that will entice multiple offers. The result is a bidding war between potential buyers. The best way you can help yourself is have someone represent you. Yes dear reader I am talking about a Realtor. In addition to the price the lender may have additional addendums and requirements that they want you to sign and do. Some lenders actually have an addendum that replaces the purchase and sales agreement and you can bet the addendum is written in their favor. Is this a bad thing you ask? I don’t know. Sometimes lenders want a form that they can use everywhere they have property to make it easier on them. They don’t want to be on the hook for something in the original contract they didn’t catch. Sometimes they are looking to make themselves additional profit. One lender demands that the buyer get a loan approval through their organization. Hmm what do you think reader? Happy House Hunting, Rich

 

 **(As of 2/23/09. The Intermountain MLS just started a system to identify these properties so the numbers may be off some while the listings get caught up with the new requirement.)